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Has Your Business Optimized Your Monthly Close Process?

December 12, 2022

The purpose of accounting is to provide timely and accurate financial information about a business. This financial information will allow business leaders to assess the position and performance of their company to continue as is or adjust course. To provide financial information to business leaders on a timely and accurate basis, the accounting team should have an efficient, standardized monthly close process.

Optimize Standard Operating Procedures

Before thinking about the monthly close process, you first need to optimize the standard operating procedures (SOPs) for daily and weekly tasks. A few examples of SOPs to evaluate include the following.

Accounts Payable (AP) Procedures

  • Do you have an AP automation software or service in place?
  • Are vendors sending invoices to the AP inbox?
  • Are vendors sending computer-generated invoices or legibly handwritten invoices?

Treasury and Cash Management Procedures

  • Do you have software to enable automatic payment processing?
  • Are you applying cash receipts to open customer invoices or double booking as revenue?
  • Do you have enough information to record ACHs and wires accurately?
  • Is the bank providing scans of deposits made to the lockbox?

Accounting Software and Tools

  • Do you have the correct general ledger system for your business?
  • Do you have the proper subsystems in place?
  • If you have all the right accounting software in place, do you know how to use it effectively?

Optimizing daily and weekly procedures is the first step in having an efficient monthly close. If you need to re-evaluate the daily and weekly tasks, those that impact a specific monthly close process should take priority. Changes for daily and weekly tasks that do not directly affect the monthly close can occur concurrently with the monthly close.

Optimize the Monthly Close Process

Once the processes leading up to the monthly close are running efficiently, then you can improve the monthly close itself.

Monthly Close Planning

  • Set a target monthly close date. Traditionally, the monthly close wraps up by the 15th calendar day of the subsequent month, which means delivering final versions of the financial statements and closing the previous month in the accounting system. If you design your accounting ecosystem correctly, a monthly close target of the 5th or 10th calendar day after month end is possible.
  • Set a timeline for each monthly close task. There is wiggle room in how long you can take to complete each task, but management needs to set the expectation. The accounting team should strive to continuously improve the processes and procedures, and this timeline will shrink as the team becomes more efficient.
  • Discuss non-routine monthly close activities. You should have these discussions ahead of the monthly close. Non-routine activities will take more time to resolve, so you should task some individuals not involved with the monthly close with tackling the non-routine activities. Having these individuals focus on non-routine activities will allow the rest of the accounting team to move forward according to plan.
  • Connect with other departments on the monthly close deliverables they owe to the accounting team. Different departments often need to complete specific tasks that feed into the accounting system (for example, the sales department completing their billings or letting the accounting team know to convert a sales order into a sales invoice). How do you establish checks and balances so that other departments provide timely deliverables? Maybe, sales commissions are only paid for sales input into the system by the 1st or 2nd day after month-end. Any sales data that misses the cutoff will be processed and paid the next period.

Monthly Close Execution

  • Daily check-ins on monthly close tasks. Use this time to establish the day’s top two to three tasks and raise red flags or special assignments.
  • Re-evaluate monthly close priorities as needed. If there are red flags, should the accounting manager step in to resolve them so that the accounting team can continue to close the books?
  • Complete daily tasks by the end of the workday. Barring any red flags, team members should complete the goals set at the beginning of the day before they leave.
  • Update project management tool with current monthly close work status. It is vital for the management team to know the work status and whether management needs to step in (for example, to request another department deliver information or work through an issue). The other benefit of using a project management tool is a monthly close checklist for the team members. The list will allow team members to free up cognitive capacity by offloading items they do not need to think about. A list also ensures that the team completes all necessary monthly close tasks.

Monthly Close Debrief

  • Discuss monthly close issues. Aim to resolve issues before the next monthly close. If that is not possible, come up with a resolution and timeline to implement the solution. Evaluate the use of other technology to aid in any issues.
  • Discuss what went well in the monthly close process.
    • How can efficient processes be applied to other aspects of the monthly close?
    • Show your team appreciation for all the smooth processes, especially for adapting to resolve challenging issues.
  • Monthly close training opportunities.
    • Excel is still a large part of accounting, so consider any additional training you can provide the team on Excel.
    • Are there new features your accounting software recently released that can reduce the accounting team’s manual processes?
    • Are there new accounting subsystems to consider?
    • Create a learning environment where the team feels comfortable raising their hands to say they don’t have the experience and would like additional training. Accountants all have a knowledge base from school, but accounting for a construction company is vastly different from accounting for a retail business.

The last point to consider, especially in today’s increasingly busy world, is whether your team members have taken time off outside the monthly close period to take a breather. Taking vacation enables your team to nurture their relationships with family and friends, which will help reduce stress, increase overall happiness, and recharge positive energy. They’ll feel refreshed and clear-headed and spread positive energy upon returning to work. If you have any questions on how to optimize your monthly close process, the Moore Colson Corporate Accounting Practice can help. Contact us for more information.

Contact an Expert


Jimmy Lee, CPA, is a Senior Manager in Moore Colson’s Corporate Accounting Practice. Jimmy’s business and consulting experience spans more than 14 years and includes serving public and large private businesses and high-net-worth individuals within the hospitality and real estate industries.